Key takeaways:
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Ether’s profitability metrics drop to levels that have historically marked local bottoms.
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Ethereum fees up 83% weekly, signalling strong onchain demand.
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ETH supply on exchanges is at a nine-year low, with strong price support at $3,000.
Ether’s (ETH) latest sell-off was stopped at $3,000, as bulls aggressively defended this level. ETH has since recovered to current levels above $3,300, increasing the odds that the price was unlikely to drop lower, backed by several onchain and technical data.
Ether traders realize losses
On-chain data reveals that Ether’s Spent Output Profit Ratio (SOPR) has dropped to 0.96, suggesting ETH investors are selling at a loss.
This implies that the ongoing correction in ETH price is driven by traders realizing losses amid panic and extreme fear.
Related: Ethereum flashes buy signs amid whispers of ‘massive bear trap’: Analysts
SOPR measures the profit or loss of spent ETH outputs by comparing the value of coins when they were last moved to their value when they are spent again.
A value of less than 1 might suggest capitulation or a market bottom, potentially signaling a good time to buy.
Historically, this scenario has often preceded price recoveries. When SOPR fell to 0.86 following Ether’s drop to $1,500 in April, it was followed by a 91% recovery in price to $2,700 four weeks later.
As such, some investors saw the drop to $3,000 as an opportunity to buy.
Ethereum onchain data signals renewed demand
On-chain activity over the last seven days paints a positive picture. Ethereum continues to expand its dominance over competitors, securing roughly 56% of the market’s total value locked (TVL), according to DefiLlama.
Even more relevant, network fees are climbing, reflecting stronger demand for blockspace, which reinforces Ether’s price strength above $3,000.
Ethereum’s fees over the past seven days climbed to $9.23 million on Friday, an 83% increase from the prior week. For comparison, Solana’s fees just rose just 9.1% while BNB Chain revenues declined by 41%.
This divergence highlights Ethereum’s dominance in decentralized exchange volumes, which climbed 22% in October, according to DefiLlama.
Decreasing ETH supply on exchanges
ETH supply on exchanges continues to drop. Data from Glassnode reveals that the ETH balance on exchanges decreased by 22% from 17 million ETH on Aug. 24 to a nine-year low of 13.14 million ETH on Friday.
This metric dropped sharply over the last seven days, when deposits to trading platforms fell by over 31%. This drop coincides with a 14% decline in Ether’s price over the same period.
A decreasing ETH balance on exchanges indicates that there is less supply available for immediate sale.
ETH price sits on strong support above $3,000
Data from Cointelegraph Markets Pro and TradingView shows that bulls are fighting to maintain the ETH price above a key support zone, as illustrated in the chart below.
This is the area between $3,000 and $3,150, defined by the 100-week and 50-week simple moving averages (SMAs), respectively. These trendlines have supported the price since July.
However, a drop below this level could trigger a fresh downtrend, with the first line of defense emerging from the $2,800 support level. Lower than that, the bulls might retreat to the 200-week SMA around $2,500, where they could mount a strong defense.
“You want to see buyers stepping in and pushing for control around the $3.2K-$3.4K area,” said crypto analyst Skew in a recent X post.
A drop below this level would be a “clear invalidation for $ETH,” the analyst added.
Fellow analyst Crypto Patel said,
“Holding $3,000 support is key, as it could spark the next bullish wave.”
As Cointelegraph reported, Ethereum traders have flipped bullish, as evidenced by the uptick in positive comments on social media, which was interpreted as a good sign that the ETH price was back on track.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.